The United States and more than 100 other countries use JDSU's color-shifting pigments to print their currencies. The technology is designed to make it simple to identify real currency and discourage counterfeiting.

JDSU said it is rolling out a new printing process with a magnetic feature that makes currency even harder for counterfeiters to duplicate.

JDSU's Santa Rosa division also develops authentication technology for the pharmaceutical industry, which faces a rising tide of phony drugs sold on the Internet.

The company provides similar authentication technology for credit cards.

JDSU has about 500 employees in Santa Rosa, headquarters for its Advanced Optical Technologies division.

Companywide, Milpitas-based JDSU reported $409 million in sales for the third quarter, down 10 percent from the same period a year ago.

JDSU's two largest business units, which make communications test and optical communications technology, took a hit as network operators cut capital spending in the quarter ended March 31, Waechter said.

JDSU lost $17.4 million in the period, compared to a profit of $38.6 million a year ago.

The company's results came in short of analyst forecasts and JDSU shares fell almost 4 percent in after-hours trading Wednesday. Shares closed at $12.04 on the Nasdaq exchange, down 2 percent from Tuesday's close.